Japanese political economy revisited: diverse corporate change,institutional transformation,and Abenomics

Abstract

This introductory article to the special issue on “Japanese Political Economy Revisited: Diverse Corporate Change, Institutional Transformation, and Abenomics” starts with a short summaryof the changing perceptions of Japan's political economy from its meteoric rise as worldwide leading model in the 1970s and 1980s to its demotiontoa problem and reform case since the later 1990s. Based on this overview, it identifies some striking issue and open questions in this conventional view of Japan's political economy as problem and the high expectations on Abenomics as Japan's current economic reform programme. Then we discuss the articles of the special issue and their new contributionsto a better understanding of the developments at the corporate level as well as institutional change and economic reforms at the macro level in the last two decades. Finally, this introductory article ends with a short outlineof a new research programme and four central research questions about the Japanese political economy.     

Introduction: Globalization and change in India

ABSTRACT

This series of papers on Globalization, Institutional Change, and Politics of reforms in India highlights some of the key characteristics of institutional change and globalization in India. This special issue points in the direction of three important conjectures on globalization and change by bringing together a few key aspects of the process of institutional change and engagement with the global in India. First, India’s liberal democracy has embraced globalization and globally influenced institutional change in an embedded liberal way. Second, this is a saga of gradual and largely endogenous change. India is deeply affected by the demonstration effect of global best practices but builds rather more after its own internal consensus. Finally, even though India is not a classic developmental state, the state is an important factor in promoting change.     

‘Growth oriented’ corporate governance reform – can it solve Japan's performance puzzle?

Abstract

Recent governance reforms in Japan aim at promoting ‘the establishment of an environment that supports appropriate risk-taking by the senior management.’ The article evaluates the reforms on the basis of two questions: do the reforms tackle the right issues? And will they be effective? The Japanese economy faces indeed a performance puzzle. Despite Japan's strong efforts in the field of research and development, its excellent work force and abundant financial capital, the economy is performing poorly in terms of productivity. The performance puzzle seems to be closely related to the way large Japanese companies are governed, namely by boards filled with internally promoted lifetime employees. However, the correlation between board composition and performance is spurious. Both are influenced by a third factor, which manifests itself in the predominance of in-house careers. In-house careers determine the composition of boards and have, over the last twenty years, had a negative impact on economic performance. The governance reforms do not address the root of Japan's performance puzzle. They may nevertheless provide an important stimulus for redesigning the way Japanese corporations recruit, train and promote future leaders.     

Taking production relations seriously: the role of defence firms in armaments cooperation

ABSTRACT

Coordinating defence-industrial relations towards harmonising and facilitating procurement policies, production processes and the joint operability of their member-states’ national defence sectors, International Armaments Organisations (IAOs) play an important role in armaments cooperation. How can we explain their institutional development? Existing literature tackles this question using International Relations theories to mid-range theories of institutions and integration. However, they adopt overly state-centric viewpoints, assume actor interests as given, and disregard the changes in the global economic landscape that constitute the backdrop of armaments cooperation. In response, we shift the focus onto a key group of actors: the defence firms. Using a Neo-Gramscian Historical Materialist approach, we investigate how the globalisation of the defence market has created a transnational defence-industrial class in Europe, and demonstrate how its economic interests have fundamentally shaped the institutional frameworks of European IAOs. We focus on the Organisation for Joint Armaments Cooperation (OCCAR) and the European Defence Agency (EDA) to illustrate our argument. Our conclusions have implications for the study of armaments cooperation, particularly highlighting how the economic nature of this policy domain necessitates a closer look at the global and regional production relations, and the agency of the defence firms.     

The Japanese consumer finance market and its institutional changes since the 1980s

Abstract

We assert, in this article, that the joint transformation of public perception about households’ over-indebtedness and financial deregulation had important implications on the government decision to reform overall consumer credit between 2005 and 2010. On the one hand, the development of collective actions by groups of lawyers to defend borrowers from moneylenders’ abusive practices represents a source of change in the public opinion about over-indebted individuals in the context of long economic stagnation. A systematic press article analysis from 1977 to 2006 shows that the rising number of these collective actions since the early 1990s may have gradually increased the political salience of social issues related to the unsecure loan market. On the other hand, financial deregulation has been a source of change by allowing banks to enter the consumer finance market since the early 2000s. Banks entry into this market transformed the logic of complementarity among traditional consumer credit actors (Shinpan, credit card companies and sarakin) in a general context of legal consumers’ protection reinforcement. Thus, evolution of Japanese consumer finance's regulation is particularly relevant to illustrate the forces of institutional change and its consequences.     

From “partnership” to “principled pragmatism”: tracing the discursive practices of the High Representatives in the EU’s relations with the Southern Mediterranean

ABSTRACT

The EU’s relations with countries in the Southern Mediterranean have a long history as the region is of great strategic importance for the Union and its member states. The High Representatives of the Union for Foreign Affairs and Security Policy have been highly involved in shaping these relations, and this role has been officially strengthened with institutional changes brought about with the Lisbon Treaty. This article analyses the role of the HR/VPs in shaping the EU's foreign and security policy towards the region with an analytical focus on discursive practice. Drawing on insights from practice theory in IR and EU studies, the analysis traces continuity and change in how the Southern Mediterranean is described in the drafting of key strategic documents. The main finding is that EU foreign and security policy towards the Southern Mediterranean shows a high degree of continuity despite several crises and institutional changes, although the discursive practices have evolved. The article ends by highlighting a conundrum that the EU can be said to implicitly acknowledge: if authoritarian states in the Southern Mediterranean are inherently unstable, yet stable enough to quench the democratic aspirations of their people, then what should be the basis for EU actions?     

Trust deficit: Japanese communities and the challenge of rebuilding Tohoku

Abstract

Trust between civil society and the state is a necessary pre-condition for successful public policy in advanced industrial democracies. It is all the more important following a mass catastrophe that affects hundreds of thousands and upends the rhythms of daily life across the country. Choices made by the Japanese government and energy utilities during and after the compounded 11 March 2011 disasters damaged relationships between civil society, utility firms, and the government. This article looks at how decision makers in Japan continue to struggle with a trust deficit and how that gap has altered the behavior of non-governmental organizations (NGOs) and civil society as a whole. Residents will continue to resist what they see as flawed disaster recovery and nuclear restart processes unless the political system undergoes major reform.     

From decisionism to consensus? the politics of the second‐generation reforms in Argentina

This article focuses on the institutional and political constraints to the adoption and implementation of second‐generation economic reforms in democratizing countries, specifically Argentina. The principal hypothesis is that these reforms require a different set of political conditions from those that enabled the successful adoption and implementation of first generation economic reforms. Institutional constraints hamper the adoption of second‐generation reforms, due both to their intrinsic characteristics and the context of stability in which the attempts arise. This contrasts with first‐generation reforms, whose nature and the surrounding context of crisis allows governments to overcome the constraints to change by pursuing a decisionist strategy. The separation of powers and purposes embodied in the Argentine institutional structure increases the number of veto points through which a plethora of discordant voices is reproduced. Rather than facilitating consensus on change, the outcome is more likely to be stalemate or lengthy negotiations, in which actors ensure that their private interests prevail. The politics of labour and fiscal reforms in Argentina illustrate the argument. The study has implications for the stereotype of ‘delegative democracy’, of which Argentina is often said to be an example.     

Europeanisation and Administrative Relations in Turkey in the Post-Helsinki Era

ABSTRACT

After the Helsinki Summit of 1999, Turkey faced the impact of Europeanisation in the context of regional policy and structural funds. This impact challenged the long-established statist tradition of the Turkish administrative structure and led to the need for reforms in order to bring its regional policy in line with European Union (EU) standards. The polity effect of Europeanisation in Turkey in the post-Helsinki era has been a change in administrative relations between three different territorial tiers: supranational, national and subnational.     

Untangling global-local linkages: The case of the Right to Information Act in India

ABSTRACT

Transparency laws have proliferated worldwide: between 1990 and 2010, 76 countries promulgated laws or ordinances on the freedom or right to information. By examining the domestic and global processes involved in the passage of the Right to Information Act, 2005 (RTIA) in India, this article locates the global trend within the local context. It argues that the RTIA signifies institutional change because it replaced the norm of secrecy—nested and perpetuated within the Indian state since colonial times—with the norm of openness. But was this change a result of an endogenous process, or did exogenous factors—such as the global policy stimulus toward transparency and accountability or the “good governance” agenda of international financial institutions—play an instrumental role? The existing scholarly literature argues that international influence was “marginal” and the process of institutional change was largely “homegrown.” By considering historical archival material and internal government documents, this article attempts to unravel the process of norm diffusion from the global to the local and to determine how much exogenous factors and global norms affected institutional change in India.     

Multiculturalism and trust in Japan: educational policies and schooling practices

Abstract

Japan's foreign population is growing, and policy-makers need to address the manifold challenges of an emerging multicultural society. Most importantly, this concerns the task to prevent societal frictions from occurring. This article puts Japan's preparedness to face the challenge of trust-building between members of different ethnic groups to test. The realm of educational policies and schooling practices will stand at the center of interest. It will be argued that the Japanese approach of an integration policy, with its strong focus on the concept of multiculturalism on a national level of policy-making, falls short of creating opportunities for trust-learning among the members of the societal majority and various minority groups. On a subnational level, however, e.g. in Kanagawa Prefecture, some best-practice examples of trust-learning across ethnic boundaries can nevertheless be identified, and may serve as starting points for future policy reforms.     

A small state’s anticipation of institutional change: effects of the looming Brexit in the areas of the CSDP and internal market

ABSTRACT

Brexit will profoundly change politics in the European Union, and all countries will have to adjust to the new situation. But the issue is more pressing for small member states that are more dependent on international organisations than big states. This article studies how the institutional setting affects a small state’s preparations for Brexit in the areas of the common security and defence policy and internal market. Contrary to the expectations, it shows that the Czech Republic, the small state under scrutiny, has invested more effort into a preventive adjustment in the internal market policy than to the CSDP. This result is explained by the existence of alternative institutional frameworks that are expected to mitigate the impact of Brexit on EU’s security and defence policy. It also suggests that while small states profit from the existence of strong institutions, they also face the risk of unmitigated impact when these institutions change.     

Passed,regulated, or applied? The different stages of emigrant enfranchisement in Latin America and the Caribbean

ABSTRACT

When are emigrants really enfranchised? Lengthy lags exist between some reforms that de jure introduced external voting and their application. In the blooming literature on emigrant enfranchisement, these lags remain unexplained. We argue that this hampers our understanding of enfranchisement processes as having different legal and political stages. With data on Latin American and Caribbean states since 1965 until the present, we investigate why some states in this region have delayed the regulation and application of external franchise while others have implemented it right after enactment. We propose hypotheses to understand these reforms as episodes marked by different contexts, engineered by different agent coalitions and embedded into larger processes of political change. In particular, we suggest that enfranchisement processes are composed of three stages: enactment, regulation, and first application. Our findings suggest that the process of adoption of external voting is shaped by the legal mechanism of enactment and the stability of political coalitions.     

Institutional Reforms and the Politics of Inequality Reproduction: The Case of the League of Nations’ Council Crisis in 1926

ABSTRACT

This contribution to the special issue explores how institutional reforms are shaped by and feed back into the politics of inequality reproduction. IR has recently begun to more closely study how hierarchies intersect. This article uses the analytical concept of “interlinkages” to grasp how international organisations couple intra-organisational patterns of unequal representation to extra-organisational social hierarchies. It empirically investigates the forms and effects of such interlinkages through a case study of the League of Nations’ Council crisis and reform in 1926. The reform reaffirmed the most prominent interlinkage: the restriction of permanent membership to states recognised as “great powers”. In addition, the reform created two new types of non-permanent seats which changed the pattern of representation of small states. Overall, the case study shows that the interlinkages and their effects were generated by an interplay of formal design and informal understandings both at the level of permanent and non-permanent seats.     

Performing Canadian State Nationalism through Federal Symmetry

Abstract

In the growing literature on the management of differences in multinational states, institutions (such as territorial autonomy or power-sharing) are typically understood as means through which various stakeholders achieve their goals. This scholarship is largely silent on the expressive and symbolic dimensions of those institutions. This is a major oversight, limiting our understanding of the politics of multinational states. I demonstrate the importance of institutional meaning by exploring the politics of federal a/symmetry in Canada, particularly in response to Quebec’s demands for greater recognition. The article’s central argument is that formal federal symmetry expresses and symbolically reproduces Canadian state nationalism. Attention to the symbolic dimension of state institutions—including federal ones—has the potential to open up new avenues of understanding of both the politics of institutional change in multinational states and the impact such change might have on the stability and inclusiveness of those states.     

Post-9/11 institutionalisation of European Union counter-terrorism: emergence,acceleration and inertia

Abstract

This article applies a historical institutionalist perspective to an empirical analysis of the sources and characteristics of the institutionalisation of European Union counter-terrorism. Drawing upon the work of Stone Sweet, Sandholtz and Fligstein, this paper critically analyses the impact of external crises in the form of major terrorist attacks on the emergence of counter-terrorism as an area of European governance. It also highlights the key policy and institutional developments, studies the role of policy innovators on the institutionalisation of counter-terrorism and supports the relevance of ‘transformative’ or ‘evolutionary’ models for the understanding of institutional change in this domain.     

Voluntary multilateralism and institutional modification: The first two decades of Asia Pacific Economic Cooperation (APEC)

The voluntary multilateralism and consequent institutional weaknesses that have characterized Asia Pacific Economic Cooperation (APEC) since its inception in 1989 are explained by the multiple geo-political fractures that characterize the Asia Pacific, as well as bureaucratic constraints and the missed opportunities to incorporate civil society. The history of APEC is the on-going creative struggle between ambitious multilateralists and national-sovereignty realists. While APEC has fallen short of its most ambitious goals, it has achieved some notable results in the cognitive diffusion of values and information, policy innovation to promote economic integration, and institutional modification in response to trial-and-error learning and to global shocks. The normative conclusions suggest additional institutional reforms and substantive agendas consistent with a flexible, evolving voluntary multilateralism.

A theory of reform consolidation in India: From crisis-induced reforms to strategic internationalization

ABSTRACT

I use the policy feedback literature to present an argument regarding the new politics of reform consolidation in India. India’s reform trajectory can be understood in terms of three distinct phases of reforms interspersed by periods of slowdown. In this narrative that goes beyond 1991, an analysis of struggles, opponents, and reversals become important, revealing a more contested pathway. In the 2000s India has moved beyond the initial, crisis-driven phase to a deeper external integration with the global economy and structural reform within. I call this phase an era of strategic internationalization. Reforms of 1985, 1991, and 1998–2000, in different ways, have begun to create new constituencies of support across India, which underlies the consolidation phase of reforms. During this long trajectory, the opponents of reforms could delay reforms but failed to reverse the direction of economic reforms. The purpose of this article is to provide a temporal framework that pays attention to mechanisms underlying different phases of reforms and how new supporters and opponents of reforms were created across different phases of the reform trajectory. Policies, the social bases of the Indian economy, and classes have been re-configured as a result.     

Continuity and change in Indian fiscal federalism

ABSTRACT

This article focuses on whether the discontinuity in the structure of the Indian economy, which started with the economic reforms of 1991, triggered changes in federal fiscal arrangements. This examination is embedded in a larger overview of the basic fiscal structure, characterized by annual flows from the national government (the “Center”) to subnational states that have both statutory (guaranteed and formulaic) and non-statutory (discretionary) components. An unforeseen consequence of trade liberalization was the loss of trade tax revenue, which drove down tax collections at the Center both as a percent of GDP, and relative to states. Four major policy changes initiated after 1991 are attributable to post-reform concerns with efficiency in the fiscal structure. The final shift of indirect taxation to a fully value added configuration, with comprehensive coverage of goods and services, is scheduled for introduction by September 16, 2017.     

Private-sector development in a transition economy: The case of Vietnam

Since Vietnam introduced its Doi Moi reform policy in 1986, the development of the private sector has been a main policy concern for the government and the ruling Communist Party. The main development challenge for Vietnam is how to sustain economic growth and reduce poverty as the labour force continues to expand. It is envisaged that the private sector will play a major role in that respect. This article looks into the issue of whether the private sector can live up to widespread expectations. High and stable economic growth indicates that reforms have been consistent but also that private-sector initiatives have moved ahead of formal institutional changes. Private-sector development is new in Vietnam and starts from a low level. The public and foreign investment sectors are major players compared to the domestic private sector, which comprises many small firms. Poverty reduction has been impressive but it is only now that private-sector development is becoming an important contributor. Stemming the growth in inequality remains a challenge where the private sector's contribution to increasing public revenue has yet to materialise.